The Kohanga Reo National Trust says it is owed an apology after a Serious Fraud Office inquiry cleared its commercial arm of misspending.

However, the Department of Internal Affairs has issued an official warning to Te Pataka Ohanga (TPO), saying it could lose its charitable status if it does not comply with charities law.

The SFO has ruled that while a TPO credit card was used for some personal spending, it was satisfied this was a mistake and the money was repaid.

Education Minister Hekia Parata asked the SFO to investigate TPO in March, just 12 hours after an Ernst & Young audit found there was no evidence of misspending by officials at the Kohanga Reo National Trust Board. The change came after she received fresh allegations.

The initial investigation was prompted by revelations a staff member at TPO had used work credit cards to purchase personal items, including an $800 Trelise Cooper dress, a 21st birthday gift and cash withdrawals on company credit cards. This led to the sacking of one official.

The SFO, which also investigated loans to staff and whanau, said today it had found no evidence of criminal offending and would not be taking further action.

While there was some personal spending it was satisfied the spending was in error and was repaid.

"This was the case in relation to expenditure at Trelise Cooper and in relation to the purchase of a wedding dress," it said.

Trust spokesman Derek Fox said it was vindication for TPO ‘‘and frankly I think the trust is owed some apologies from people who have been criticising it fairly heavily for some months now’’.

‘‘I think it’s quite clear that what this report shows is there was no fraud, no criminal activity and if you couple that with the report from Ernst & Young early in the year there’s no misspending of public funds.’’

The trust would continue with its efforts to overhaul its governance structure to make it more transparent while it also wanted to renew negotiations with the Crown over its successful Treaty of Waitangi claim.

The Waitangi Tribunal ruled in 2012 that the Government had failed to support the kohanga reo movement but negotiations stalled while the misspending allegations were investigated.

Fox said the TPO staff member whose job was lost over the allegations was still working through human resource issues with the trust and it was not yet known what impact the report would have on those talks.

Department of Internal Affairs charities services general manager Lesa Kalapu said TPO had been officially warned about its non-compliance with charities law. The department had established steps the trust needed to take by July 21 to avoid losing its charitable status.

‘‘We will actively monitor TPO’s progress… If we find sufficient evidence of non-compliance or wrongdoing we would again investigate TPO.’’

Parata stood by her decision to refer TPO to the SFO, maintaining her stance that it was not within her power to investigate the subsidiary as it did not receive direct taxpayer funding.

‘‘The challenge remains in all of this for the trust to provide more transparency and accountability, and to do so in a way that allows the Government, the public and its movement to have confidence in it.’’